MTM Options Trader Newsletter - Vertical Spreads – The Secret to Successful Trades

[image]( [image] This Week in the Market If you do not know what an extended underlying is supposed to look like, considering the major indexes may give you a better idea. They all set record highs last week and although they may be a tad extended, none of them look like they want to slow down. At some point they will have to as they have all drifted far from their 50-day moving averages. Will this be the week we get some semblance of a pullback? The market continued to take any potential negative news in stride, including the ongoing failure to pass the infrastructure bill and rising cases of the virus, particularly overseas. At a minimum, market participants should consider keeping a non-bearish bias heading into this week. Implied volatility levels dropped but rallied back a tad into last week’s close. Quarterly earnings have slowed down, but a few big names will report in the next couple of weeks, so make note of that. It is a relatively slow week as far as economic reports go except for Wednesday with none on Monday or Thursday, which is Veterans Day. Banks are closed that day, but the stock market is still open. At the time of this writing, no Fed members were expected to make any public speeches. Have a safe, healthy and a very prosperous week! Nov 9: Producer Price Index Nov 10: Initial Jobless Claims Nov 10: Consumer Price Index Nov 10: Wholesale Inventories Nov 10: Federal Budget Nov 12: JOLTS [Read Our Blog]( Vertical Spreads – The Secret to Successful Trades As an option trader, vertical spreads are most likely an integral part of your arsenal as a swing trader and if they are not, they should be. What makes them so worthy of your consideration is the wide variety of risk/reward and probability scenarios depending on an option trader’s outlook. Vertical spreads can be extremely versatile and represent a major building block of more complex spreads. With a vertical spread, the various strike prices for an option are arranged vertically and the expirations available to trade are displayed horizontally. This defined risk position consists of both a long and short position at different strike prices within the [Continue Reading ...]( MTM Watchlist Here are a few trade ideas we may discuss in group coaching class this coming week: GS – We have done several bear call spreads and iron condors on this stock over the past couple of weeks and it continues to trade in the same range. Expect more of the same this week. FB – After gapping higher on Friday, the stock reversed at its 50-day moving average. With a weak open on Monday, bear call spreads around that moving average will be explored. TSLA – The stock has been on a climatic run higher, as the bull call spreads we have modeled out in class over the past few weeks can attest to. With the $1,200 level looking like potential support, bull put spreads like we did on Friday may be considered again. [image] We're honored to have Dan's Book Trading Option Greeks listed as one of the [Top 6 Books to Become an Option Trader]( by Investopedia. [Buy Now on Amazon]( The strategies in this newsletter are for educational and informative purposes only. All information disclosed in this newsletter should not be considered complete in its entirety. Market Taker Mentoring, Inc. will not be held responsible for changes, oversights, errors or omissions. Dates, prices, news and other information may not be accurate. Please verify all information before trading. You alone are responsible for your own investment decisions. Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD), which can be obtained from your broker; by calling (888) OPTIONS; or from The Options Clearing Corp., 125 S. Franklin St., Suite 1200, Chicago, IL 60606. No statement in this newsletter is intended to be a recommendation or solicitation to buy or sell any security or to provide investment or trading advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Copyright Market Taker Mentoring, Inc. 2008 - 2021. All rights reserved. Reproducing or redistributing this content is a violation of federal law. [image] If you do not wish to be contacted via email, you can unsubscribe using this link: [Unsubscribe]( Unsubscribing from email notifications DOES NOT cancel your class, subscription or recurring payments. We recommend that current students do not unsubscribe from email notifications. If you unsubscribe from email notifications, you will not be notified on how to access the classes or subscriptions in which you are enrolled. Market Taker Mentoring, Inc. PO Box 117 Frankfort, Illinois 60423 United States